press release
Coalition announces new consultation on ‘no win no fee’ agreements
26 July 2010
The Coalition government has today announced a consultation on
implementing the recommendations laid out in Lord Justice Jackson’s
Review of Civil Litigation Costs.
The consultation, which will begin in the Autumn, will
specifically focus on the reform of Conditional Fee Agreements and
seek views on alternative funding arrangements such as
Damages-Based Agreements or 'contingency fees'
Lord Justice Jackson’s report recommended, amongst others,
banning referral fees, ending the recoverability of success fees
and after-the-event insurance from unsuccessful defendants, capping
legal success fees at 25% of damages and fixed costs for fast track
claims.
Nichola Evans, Partner and a specialist in conditional fee
agreements and after-the-event insurance at Browne Jacobson,
commented:
“There was a real fear that the Coalition would simply put
Jackson’s recommendations on the back burner so the speed and
timing of this announcement will surprise many.
“However the consultation will only look at some of the
recommendations contained in the report, albeit some of the most
important recommendations, such as ATE and success fees. Other
matters such as referral fees will be dealt with elsewhere.
“In addition it will be important to see how Lord Young reports
on the alleged ‘compensation culture’. Our belief is that it is
important for all issues to be dealt with together so that there is
a joined up approach.
“It is reassuring that the Government is looking at proposals
for fixed costs on the fast track and has recognised the unique
problems associated with clinical negligence claims. However it has
left us in the dark when it comes to non personal injury claims and
legal expenses insurance.
“The effect of an increase in general damages as a means of
offsetting costs must also be looked at in detail, both from the
claimant and defendant point of view.
“Since the Jackson report was published many insurers have
publically stated that further research needs to be conducted as to
whether or not there would be real cost savings should these
measures be brought in, with some suggesting that the Jackson
measures might actually increase costs.
“Now is the time for proper empirical date to be supplied to the
government on the issue and we would urge all interested parties to
participate in this consultation”